The exact terms of the deal, which went through yesterday (2 February), were not disclosed, but EFI will make a series of payments to Xerox totalling $22m (£17.5m) over the next 18 months. Discussions had been taking place for a number of years before the deal was agreed.
With the extra sales gained from the acquisition, EFI expects revenue to increase in Q1 2017 by $5m, from $236m to $241m. Full-year revenue for Fiery is expected to see a modest increase, while Xerox has committed to an annual miniumum digital front-end purchase level.
The deal will integrate Xerox’s FFPS with EFI’s Fiery front-ends, already used in a number of Xerox machines, so that eventually all front-ends will be supplied under the Fiery name. EFI now owns the intellectual property for the FFPS business.
EFI has also entered into a new agreement with HCL, Xerox’s previous supplier, to cover development and support.
EFI Fiery’s vice-president of marketing John Henze said: “Xerox and EFI have been partners for 25 years and very good partners, and in all that time Fiery has been the main digital front-end offering for Xerox office and production printers.
“It’s a simplified message, it frees them [Xerox] to focus on what they do best – print engines – and for EFI it’s good for a number of reasons, including solidifying Fiery as the industry-leading digital front-end, increasing our share with Xerox and gaining access to additional technology that we acquired with FFPS.
Existing machines will continue to use both FreeFlow and Fiery print servers during the period of consolidation, which Henze couldn’t put a timer on but said “transition could be faster than you think” as the vast majority of Xerox machines already use Fiery front-ends.
“The platform will be Fiery, that will be the core-based platform. We will look at the intellectual property we have acquired and determine what makes sense to use as part of the core platform. We will incorporate the technology as we think makes sense and as we think will benefit customers.”
Fiery and FFPS servers are used for all production Xerox presses, such as Versants and iGens. Xerox and EFI recently collaborated to develop a new print server, the Xerox IJ Print Server powered by Fiery, to drive the Xerox Trivor 2400 inkjet press.
The agreement is only for Xerox’s FFPS and does not impact Xerox front-ends that only carry a FreeFlow sub-brand name, namely FreeFlow Core, FreeFlow VI Suite, Free Flow Makeready and FreeFlow Digital Publisher.
In Xerox’s first results since it officially completed its separation from Business Process Outsourcing (BPO) business Conduent, it posted full-year revenue and profit declines.
Earlier this week, EFI reported record yearly sales but narrowly missed its $1bn turnover target for 2016.